DHL expanding U.S. helicopter delivery, sales force

NEW YORK Thu May 29, 2014 6:57pm EDT

Trucks are parked at the new distribution centre of the German postal and logistics group Deutsche Post DHL in Berlin November 12, 2013. REUTERS/Tobias Schwarz

Trucks are parked at the new distribution centre of the German postal and logistics group Deutsche Post DHL in Berlin November 12, 2013.

Credit: Reuters/Tobias Schwarz

NEW YORK (Reuters) - DHL Express plans to start delivering documents and other items by helicopter in Chicago and Charlotte, North Carolina, this year, buoyed by the service's success in other cities, the new head of the company's U.S. unit said on Thursday.

The international delivery company, a unit of Deutsche Post AG (DPWGn.DE), also plans to double its U.S. sales force to 600 in the next two years to try to increase market share.

And, DHL may use Boeing 747 jets on its route from its Cincinnati hub to Miami, replacing 767s, because of the growing volume of packages heading to and from Latin America, Mike Parra, chief executive of DHL Express for the United States, told Reuters.

"We're seeing double-digit growth" in package volume in the United States, said Parra, who became head of the U.S. unit on March 1.

Although revenue for the Americas express-package business was flat at $517 million in the first quarter, it was up about 10 percent when currency fluctuations in Latin America are factored out, he said.

DHL has been using helicopters for deliveries in New York for the past several years, hopping over traffic to carry legal documents to Wall Street and design drawings, fabric samples and clothing prototypes to Midtown.

In March, DHL began using helicopters to carry documents to attorneys and bankers in downtown Los Angeles, cutting a 90-minute trip to nine minutes, and delivering by 8 a.m.

Now, bankers and attorneys in other cities are asking for earlier delivery of trade documents, real estate contracts and other legal paperwork, Parra said, noting that the company is not aware of competitors offering the service.

"We're looking to expand in Chicago in the next three to four months and in Charlotte by the end of the year," he said.

Parra noted that DHL doesn't charge more for helicopter delivery and helps cover the cost of the service by redeploying vans that had made the trip by ground to other routes.

DHL is aiming to lift its operating margin to double digits from the current single digits by becoming more efficient, investing in technology and finding better ways to make deliveries that improve service, such as helicopters.

The company is spending 600 million to 700 million euros ($816 million to $952 million) a year on upgrading its fleet of vehicles, improving hubs, and automating handling and tracking systems.

DHL Express U.S. also is experiencing strong growth in importing e-cigarette components such as smaller batteries, holders and electronics, as the demand for the vapor-based devices grows.

"The vape market is blowing up," Parra said, pointing out that the shipments go to a range of destinations, including consumers, convenience store chains, warehouses and restaurants. DHL doesn't ship lithium batteries or the nicotine liquid used in e-cigarettes because of the risk of fire, he said.

Business-to-consumer shipments from the United States to Australia and the UK are up by double digits, partly because consumers in those countries have realized smaller purchases of less than about $1,000 often are not assessed any taxes.

"It's like duty-free," Parra said.

(Reporting by Alwyn Scott)